Editor’s note: A previous version of this story stated the Manitoba government was dropping its PST rate from seven to six per cent. The province’s premier said that would be taking place in 2021 on March 26. The latest edition of this story has been updated with the correct information.
Monday’s budget release showed the province projecting a $2.4-billion deficit for the 2020-2021 fiscal year.
The finance minister said a bump in PST wouldn’t be implemented in the short term to help ease the province’s finances.
“We don’t know in deferred payments what will be paid, we don’t know how many businesses will not survive this. We have too many unanswered questions. The need for tax revenue will be reviewed annually for what it will take to balance the budget,” Donna Harpauer told reporters during her June 15 press conference.
The additional deficit means the province’s public debt is $24.2 billion.
Representatives of several business and taxpayer groups say they are pleased, noting many are on a tighter budget as a result of the pandemic.
“There’s a temptation for every government to just go to the taxpayer well and tax some more taxes out. The Saskatchewan government resisted that temptation and that’s really important because when we get this recovery going, we need everybody firing on all cylinders,” said Canadian Taxpayers Federation’s (CTF) prairie director Todd McKay.
The Retail Council of Canada noted sales in its businesses have been soft with each phased reopening.
And even with stores moving online, there is still an unfair playing field.
“Often with online purchasing especially with foreign sellers like Amazon, they don’t collect taxes and create a disadvantage to brick-and-mortar stores that are located in the province. We think that increased PST is one of those things that would’ve added an additional barrier to recovery,” said prairie director John Graham.
One university political scientist added that 2020 is an election year and a PST bump would mostly impact low-and-middle income families, who are the bulk of the electorate.
“It also sends a signal in the market that there’s some confidence about where our recovery is going to go, which also helps with investment which further stimulates the economy,” said the University of Saskatchewan’s Greg Poelzer.
“The last thing (businesses) need is for all of that to be harder because taxes are higher. We’re in a tough situation. The government is going to have to find ways to deal with the deficit, but the best way to deal with the deficit is to get the economy rolling again,” MacKay added.
Alberta Premier Jason Kenney said it isn’t the time for his province to introduce a sales tax even though this year’s deficit could reach $20 billion.
Manitoba’s government was set to drop its PST from seven per cent to six per cent on July 1, but Premier Brian Pallister said that will have to wait until things settle down.